Investment market Hamburg 3Q2022: Share purchases and take-overs boost volume of transactions

The volume of transactions completed on the market for commercial real estate in Hamburg stood at some €3.9bn by the end of the 3rd quarter. This figure was well above that of the prior year (€2.1bn) and was in fact the second-highest total ever recorded at the end of a third quarter, topped only by the record €4bn noted in 2018. Nearly half of the transaction volume was completed in the 3rd quarter. However, the high figure owed much to some outlier trades. “The figures seem to indicate brisk trading, but about half of this year’s overall volume to date results from major take-over deals and the acquisition of shareholdings in development projects,” reports Sandra Ludwig, managing director of Grossmann & Berger, a member of German Property Partners (GPP). As Grossmann & Berger has observed, trades of this kind included the takeover of the huge alstria portfolio (Q1) and the purchase of shareholdings in the “Elbtower” (Q3) and “EDGE ElbSide” (Q2). If these outlier trades are factored out, the volume of transactions falls to a mere €1.9bn. Ludwig expects the year to close on a more subdued note. “The increased costs of borrowing coupled with persistently high asking prices continue to weigh on the market. Interest rates have now reached a level last seen ten years ago. Therefore there is ongoing pressure on sellers to reduce prices.” Thanks to the outlier trades, the volume of transactions has already surpassed the total for the full year in 2021 (€3.2bn).

Market details: 

• Once again, office properties were the most sought-after asset class, accounting for 80 % of total trading. Trailing a long way behind, retail properties (9 %) and logistics real estate (7 %) were in second and third place. Even without the alstria portfolio, 68 % of trades related to office buildings.
• Portfolio sales generated 43 % of the total traded. Without the alstria transaction, their share would have been only 8 %. 
• Fund managers were the biggest group of investors, responsible for some 42 % of the volume – likewise a result of the alstria portfolio. Discounting this trade, specialist funds were the biggest group of investors (29 %) followed by open-ended property investment funds (23 %).
• Looking at the Vendors, property investment AGs/REITs were predominant with a market share of some 44 %.  Factoring out the alstria outlier trade, developers (35 %) and open-ended property investment funds (27 %) were the biggest groups of vendors. 
• International investors accounted for 56 % of the volume traded. Without the alstria transaction, their share would have been 29 %. 
• The prime yields on office properties (2.9 %) and commercial buildings (3.0 %) inched up by 0.3 percentage points year on year. Yields on industrial and logistics real estate remained unchanged year on year but were 0.2 percentage points higher than in the previous quarter. Yields are expected to rise further by the end of the year due to rising interest rates.